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Carnival Corporation (CCL) Extended Graph Analysis

September 21st, 2020 Posted by Extended Analysis No Comment yet

Company Profile

CCL logo

Carnival Corp is the largest leisure company in the world with a combined fleet of over 100 vessels. A British-American corporation headquartered in Miami, Florida, USA. The company was founded by Ted Arison and incorporated in 1972 in Panama and Carnival Plc was incorporated in England and Wales in 2000. Carnival Corporation and Carnival PLC operate in a dual-listed company (DLC) under the New York Stock Exchange (NYSE) and London Stock Exchange (LSE) under the stock symbol CCL. In 2003 it became Carnival Corporation plc Further, in 2013, the company had established its headquarter in Asia located in Singapore and followed by headquartersCounsel in China.

CCL Brands

CCL Brands

  1. Carnival Cruise Line is the most popular cruise in North America and operates 27 ships.
  2. Princess is the world’s third-largest cruise line as per guest capacity.
  3. Holland America Line has a premium fleet of 15 spacious, elegant mid-sized ships.
  4. Cunard is the British essence of cleansing for travelers with White Star Service, fine dining, and a worldly-wise adventure.
  5. Seaboard is an ultra-luxury cruising vacation
  6. Aida Cruises is a fast-growing and most famous tourism business in Germany.
  7. Costa Cruises provides Italian style in cuisine.
  8. P&O Cruises (Australia) provide a classic holiday experience.
  9. P&O Cruises (UK) has a fleet of seven ships with its new ship Britannia.

Source: Carnival Corp website

Carnival Corporation (CCL) Extended Graph Analysis

 

2. CCL CASH FLOW

CCL CASH FLOWS

2015 2016 2017 2018 2019 2020
Net cash flow provided by operating activitIes 4,545,000,000 5,134,000,000 5,322,000,000 5,549,000,000 5,475,000,000 502,000,000
Net cash used for investing activities -2,478,000,000 -3,323,000,000 -3,089,000,000 -3,502,000,000 -5,277,000,000 -3,615,000,000
Net cash provided by (used for) financing activities -942,000,000 2,591,000,000 -2,452,000,000 -1,460,000,000 -655,000,000 8,796,000,000
Capital expenditure -2,294,000,000 -3,062,000,000 -2,944,000,000 -3,749,000,000 -5,429,000,000 -4,076,000,000
Free cash flow 2,251,000,000 2,072,000,000 2,378,000,000 1,800,000,000 46,000,000 -3,574,000,000
Working Capital -4,505,000,000 -5,373,000,000 -7,204,000,000 -6,979,000,000 -7,068,000,000 -3,636,000,000

Facts:

  • Cash provided by operating activities was $502 million in 2020 trailing twelve months.
  • Cash used in investing activities was -$3.6 billion in the trailing twelve months.
  • Net cash provided by (used for ) financing activities was $8.796 billion in the trailing twelve months.
  • Capital expenditures were -$4.1 billion in the trailing twelve months.
  • Free Cash Flow was -$3.574 billion in the trailing twelve months.
  • Working capital was -$3.636 billion in the trailing twelve months.

Explanation

  • Cash provided by operating activities has suddenly dropped 91 percent from 2019 to the trailing twelve months due to the Covid-19 pandemic.
  • Cash used in investing activities was an investment in property, plant, and equipment.
  • Cash provided by (used for) financing activities were debt issued and repayment, dividends payment, and common stock repurchased.
  • Capital expenditures were purchased of property, plant, and equipment.
  • Free cash flow dropped 97 and 7870 percent in 2019 and 2020 respectively.
  • Working capital was negative in the last five years due to current liabilities being higher than the current assets.

Interpretation

The cash flows of CCL show that the company is not liquid because free cash flow and the working capital were unfavorable due to higher liabilities than current assets. Although the company has managed to generate positive cash from operations in the last five years, the company suffered a downturn in 2020.

 

2. CCL BALANCE SHEET

CCL BALANCE SHEET

2015 2016 2017 2018 2019
Total cash 1,395,000,000 603,000,000 395,000,000 982,000,000 518,000,000
Current Assets 2,451,000,000 1,689,000,000 1,596,000,000 2,225,000,000 2,059,000,000
Net property, plant and equipment 31,888,000,000 32,429,000,000 34,430,000,000 35,336,000,000 38,131,000,000
Total non-current assets 36,786,000,000 37,247,000,000 39,182,000,000 40,175,000,000 43,000,000,000
Total assets 39,237,000,000 38,936,000,000 40,778,000,000 42,400,000,000 45,059,000,000
Current liabilities 6,956,000,000 7,072,000,000 8,800,000,000 9,204,000,000 9,127,000,000
Non-current liabilities 8,510,000,000 9,267,000,000 7,762,000,000 8,754,000,000 10,566,000,000
Total liabilities 15,466,000,000 16,339,000,000 16,562,000,000 17,958,000,000 19,693,000,000
Retained earnings 20,060,000,000 21,843,000,000 23,292,000,000 25,066,000,000 26,653,000,000
Stockholders equity 23,771,000,000 22,597,000,000 24,216,000,000 24,443,000,000 25,365,000,000

Facts:

  • The total cash was $518 million in 2019.
  • Current assets were $2 billion in 2019.
  • Net property, plant, and equipment were $38 billion in 2019.
  • Total non-current assets were $43 billion in 2019.
  • Total assets were $45 billion in 2019.
  • Current liabilities were $9 billion in 2019.
  • Non-current liabilities were $10.6 billion in 2019.
  • Total liabilities were $19.7 billion in 2019.
  • Retained earnings were $26.7 billion in 2019.
  • Stockholders’ equity was $25.4 billion in 2019.

Explanation

  • Total cash represents 25 percent of current assets.
  • Current assets represent 5 percent of total assets.
  • Net property, plant, and equipment represent 85 percent of total assets.
  • Total non-current assets represent 95 percent of the total assets.
  • Total assets grew 15 percent in five years.
  • Current liabilities represent 46 percent of total liabilities.
  • Non-current liabilities represent 54 percent of total liabilities.
  • Total liabilities represent 44 percent of the total liabilities and stockholders’ equity.
  • Retained earnings were 108 percent of total stockholders’ equity.
  • Stockholders’ equity represents 56 percent of total liabilities and stockholders’ equity.

Interpretation

The balance sheet of the company was stable although the debt was higher than that of the current assets. The company may have a hard time meeting its current obligations in due time. The shareholders have a little higher stake in the company than the creditors.

 

3. CCL INCOME AND MARKET

CCL INCOME AND MARKET

2015 2016 2017 2018 2019 2020
Revenue 15,714,000,000 16,389,000,000 17,510,000,000 18,881,000,000 20,825,000,000 16,844,000,000
EBIT 2,574,000,000 3,071,000,000 2,898,000,000 3,325,000,000 3,276,000,000 -419,000,000
Net Income 1,757,000,000 2,779,000,000 2,606,000,000 3,152,000,000 2,990,000,000 -2,952,000,000
EBITDA 3,642,000,000 4,789,000,000 4,710,000,000 5,418,000,000 5,426,000,000 -306,000,000
Market Capitalization 42,059,000,000 37,796,000,000 47,654,000,000 34,313,000,000 34,768,000,000 14,451,000,000
Intrinsic Value 72,052,000,000 67,935,000,000 78,446,000,000 58,760,000,000 52,913,000,000 74,805,000,000

Facts:

  • Revenue was $16.8 billion in the trailing twelve months.
  • EBIT was -$419 million in the trailing twelve months.
  • Net income was -$3.0 billion in the trailing twelve months.
  • EBITDA was -$306 million in the trailing twelve months.
  • Market capitalization was $14.451 billion in the trailing twelve months.
  • The intrinsic value was $74.80 twelve months.

Explanation

  • Revenue grew 7 percent in five years.
  • EBIT represents -2 percent of the revenue.
  • Net income was -18 percent of the revenue.
  • Net income fell nearly 200 percent from 2019 to the trailing twelve months.
  • EBITDA was a negative 2 percent of the revenue.
  • Market capitalization declined 66 percent in five years.
  • Intrinsic value increased by 4 percent in five years.
  • The intrinsic value was higher by over 400 percent against market capitalization.

Interpretation

The income statement of the company was not impressive in 2019 and 2020 due to a decreased in revenue and net earnings. The company’s earnings were impacted by the issue of the Covid-19 pandemic.

 

4. CCL FINANCIAL RATIOS

CCL FINANCIAL RATIOS

2015 2016 2017 2018 2019 2020
Asset turnover (average) 0.40 0.42 0.44 0.45 0.48 0.36
Return on assets % 4.46 7.11 6.54 7.58 6.84 -6.26
Return on equity % 7.31 11.99 11.13 12.96 12.01 -13.14
Return on invested capital % 5.95 9.26 8.53 9.77 8.85 -6.95
Debt/Equity 0.31 0.37 0.29 0.32 0.38 0.78

Facts:

  • Asset turnover was averaging 0.36 ratio in the trailing twelve months.
  • Return on assets was -6.26 percent in the trailing twelve months.
  • Return on equity was -13.14 percent in the trailing twelve months.
  • The return on invested capital was -6.95 percent in the trailing twelve months.
  • The debt/Equity ratio was 0.78 in the trailing twelve months.

Explanation

  • Asset turnover indicates that for every dollar invested in assets, the company generated 33 cents of sales.
  • Return on assets indicates that the company generated a loss in net income of 6.26 cents for every dollar invested in assets. 
  • Return on equity indicates that the company generated a net loss in net income of 13.14 cents per share in common equity for every dollar invested.
  • Return on invested capital indicates that the company generated a loss of 6.95 cents for every dollar invested in its capital base.
  • Debt/Equity indicates that the company has $0.78 debt for every dollar invested in equity. In other terms, the company’s assets are funded by nearly 80 percent of the creditor’s fund.

Interpretation

The financial ratios were not impressive because the company had incurred losses in the latter year. Hence, the company has tough financial situations in 2019 and 2020 due to the global issue of the COVID-19 crisis. 

 

5. CCL KEY EXECUTIVE COMPENSATION

CCL KEY EXECUTIVE COMPENSATION

2015 2016 2017 2018 2019
Key Executive Compensation
Salary 3,309,000 3,302,000 4,588,480 4,648,698 4,588,480
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 7,493,707 9,816,104 14,960,611 15,103,315 15,951,924
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 8,988,800 8,198,345 9,502,592 10,524,731 4,377,670
Other Compensation 793,310 796,020 1,020,382 991,812 1,407,836
Total 20,584,817 22,112,469 30,072,065 31,268,556 26,325,910
Arnold W. Donald/ President and CEO
Salary 1,000,000 1,000,000 1,500,000 1,500,000 1,500,000
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 3,527,949 4,598,986 6,821,713 7,028,094 7,111,120
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 4,618,950 4,041,250 4,377,000 4,689,000 2,250,000
Other Compensation 227,009 241,584 347,362 289,790 288,394
Total 9,373,908 9,861,820 13,046,075 13,506,884 11,149,514
Michael Thamm/ CEO, Costa Group and Carnival Asia
Salary 784,000 777,000 963,480 1,023,698 963,480
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 1,145,869 1,479,178 2,306,767 2,415,232 3,284,809
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 1,204,000 1,053,945 912,442 1,760,981 474,970
Other Compensation 259,932 214,217 117,534 83,666 476,915
Total 3,393,801 3,524,340 4,300,223 5,283,577 5,200,174
Stern Kruse/ Group CEO of Holland America Group and Carnival UK
Salary 825,000 825,000 925,000 925,000 925,000
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 1,586,417 2,096,489 2,713,268 2,704,688 2,559,153
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 1,510,000 1,654,400 2,097,600 1,808,400 565,200
Other Compensation 80,308 83,270 95,117 78,305 84,039
Total 4,001,725 4,659,159 5,830,985 5,516,393 4,133,392
David Bernstein/ CFO and Chief Accounting Officer
Salary 700,000 700,000 750,000 750,000 750,000
Bonus 0 0 0 0 0
Annual Other Income 0 0 0 0 0
Restricted Stock Award 1,233,472 1,641,451 2,094,331 1,959,205 1,979,949
Securities Options 0 0 0 0 0
LTIP Payout 0 0 0 0 0
Non-Equity Compensation 1,655,850 1,448,750 1,459,000 1,563,000 750,000
Other Compensation 226,061 256,949 221,746 283,589 292,472
Total 3,815,383 4,047,150 4,525,077 4,555,794 3,772,421
Arnaldo Perez/ General counsel and Secretary
Salary 450,000 450,000 450,000
Bonus 0 0 0
Annual Other Income 0 0 0
Restricted Stock Award 1,024,532 996,096 1,016,893
Securities Options 0 0 0
LTIP Payout 0 0 0
Non-Equity Compensation 656,550 703,350 337,500
Other Compensation 238,623 286,462 266,016
Total 2,369,705 2,405,908 2,070,409

Facts:

  • Total key executive compensation in 2015 was $20,584,817.
  • Total key executive compensation in 2016 was $22,112,469.
  • Executive compensation in 2017 was $30,072,065.
  • Executive compensation in 2018 was $31,268,556.
  • The total executive compensation in 2019 was $26,325,000.

Explanation

  • The total key executive compensation was nearly one percent of the total net income loss.
  • The total compensation of Arnold W. Donald/ President and CEO represents 42 percent of the total compensation in 2019.
  • The total compensation of Michael Thamm/ CEO, Costa Group, and Carnival Asia represent 20 percent of the total compensation.
  • The total compensation of Stern Kruse/ Group CEO of Holland America Group and Carnival UK represents 16 percent of the total compensation.
  • The total compensation of David Bernstein/ CFO and Chief Accounting Officer represents 14 percent of the total compensation.
  • Compensation of Arnaldo Perez/ General Counsel and Secretary represents 8 percent of the total compensation.

Interpretation

Total executive compensation includes salary, restricted stock award, securities options, non-equity compensation, and other compensation.

 

6. CCL LOBBYING AND CONTRIBUTIONS

CCL LOBBYING AND CONTRIBUTIONS

PERIOD AMOUNT
1990 $47,000
1992 $66,250
1994 $68,450
1996 $144,300
1998 $184,800
2000 $511,550
2002 $291,099
2004 $381,450
2006 $255,399
2008 $349,155
2010 $492,310
2011 $1,164,000
2012 $404,131
2013 $958,000
2014 $957,000
2015 $1,058,710
2016 $1,233,491
2017 $480,000
2018 $480,000
2019 $790,000
2020 $450,000

Facts:

The company is incurring lobbying and contributions from 1990 to the current date to politicians.

Explanation

A note from OpenSecret.org Center for Responsive Politics quoted below:

NOTE: Figures on this page are calculations by the Center for Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on July 23, 2020, and includes spending from January 1 – June 30. Prior years include spending from January through December.

Interpretation

A special interest’s lobbying activity may go up or down over time, depending on how much attention the federal government is giving their issues. Particularly active clients often retain multiple lobbying firms, each with a team of lobbyists, to press their case for them. Source: OpenSecret.org / Center for Responsive Politics

 

7. CCL FINANCIAL STRENGTH

CCL FINANCIAL STRENGTH

DATA

Working Capital -$3,636,000,000
Total Assets $45,059,000,000
Sales $16,844,000,000
EBIT -$419,000,000
Market value of equity $15,679,000,000
Book value of total liabilities $19,693,000,000
Retained earnings $26,653,000,000

CALCULATIONS

Ratio Score Result
A – Working Capital / Total Assets -0.08 1.20 -0.10
B – Retained Earnings / Total Assets 0.59 1.40 0.83
C – EBIT / Total Assets -0.01 3.30 -0.03
D – Market Value of Equity / Book Value of Total Liabilities 0.80 0.60 0.48
E – Sales / Total Assets 0.37 1.00 0.37
Z-Score 1.55


Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

 

Explanation:

Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The Z-Score of Carnival Corporation was calculated at a 1.55 score. A score of 0 – 1.80 indicates that the company will declare bankruptcy in the future, according to Dr. Altman’s grading scale. The main factors of this statistical measurement are profitability, liquidity, leverage, and efficiency. The financial health of CCL is not satisfying. The company has poor cash flow and might not be able to pay its liabilities and as a result, will have to declare bankruptcy. 

OVERVIEW

Carnival Corporation’s financial records including its financial strength in 2020 suffered a downturn in its earnings because of the impact of the COVID-19 crisis. However, the company has adopted measures and strategies to augment its earnings. In this kind of global scenario, it needs to make big moves quickly, studies, and efforts to make an intelligent innovation that can save the company through productivity gains. The company is facing certain uncertainties as to when the situation will be back to its normal business operations. 

CITATION

https://www.carnivalcorp.com/corporate-information

https://www.sec.gov/cgi-bin/browse-edgar?company=CARNIVAL+CORP&match=&filenum=&State=&Country=&SIC=&myowner=exclude&action=getcompany

https://www.morningstar.com/stocks/xnys/ccl/quote

Researched and written by Criselda

 

Note:

Research Reports can be found under the company tab.